Profit Shifting and Measured Productivity of Multinational Firms

20 Pages Posted: 10 Jan 2011

See all articles by Giorgia Maffini

Giorgia Maffini

University of Oxford - Said Business School

Socrates Mokkas

affiliation not provided to SSRN

Abstract

(Samuel Palmisano (2006), IBM Chairman, President and CEO on the evolution of multinationals). Abstract. This article examines the differences in total factor productivity (TFP) between multinationals and domestic firms before and after tax rate changes. The aim is to investigate whether the host country corporate tax rate has a significant influence on the measured TFP advantage of multinational companies. Using a sample of approximately 16,000 European manufacturing firms (1998-2004), we find that a cut by 10 percentage points in the statutory corporate tax rate would increase multinationals measured TFP by about 10% relative to domestic firms, consistent with profit shifting by multinationals. At the sample mean, this would imply a 44% increase in the TFP advantage of multinationals.

Keywords: D24, F23, H25

Suggested Citation

Maffini, Giorgia and Mokkas, Socrates, Profit Shifting and Measured Productivity of Multinational Firms. Oxford Bulletin of Economics and Statistics, Vol. 73, No. 1, pp. 1-20, 2010, Available at SSRN: https://ssrn.com/abstract=1736876 or http://dx.doi.org/10.1111/j.1468-0084.2010.00610.x

Giorgia Maffini (Contact Author)

University of Oxford - Said Business School ( email )

Park End Street
Oxford, OX1 1HP
Great Britain

Socrates Mokkas

affiliation not provided to SSRN

No Address Available

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